EPA coal ash regulation could cost DWP ratepayers

New pending federal coal ash requirements could cost the Los Angeles Department of Water and Power and its ratepayers between $68 million and $713 million in one-time capital expenses, plus millions more in annual operating costs, according to a DWP financial report.

An Environmental Protection Agency rule, expected later this year, is one of a handful of environmental reforms the Obama Administration is advancing. From vehicle fuel efficiency standards to carbon emission caps at power plants, this industry regulation presents the age-old trade off between monetary costs and environmental or health benefits.

“Coal ash is a small component of everything that’s going on,” DWP Ratepayer Advocate Fred Pickle said, “but with that rate impact it could be a big deal.”

A byproduct with toxic chemicals and heavy metals, coal ash was thrust into the headlines in 2008 after a massive spill in Tennessee. Coal ash has also been linked to groundwater contamination, where materials such as lead and arsenic have seeped into drinking water.

The Obama administration kicked off a process in 2009 for federal coal ash disposal standards. Today, states decide how to regulate the waste, and some are more lax than others. But the EPA process stalled until earlier this year, when a federal judge ordered the administration to decide by Dec. 19.

Under new rules, the DWP could have to change the way it stores coal ash at both its Intermountain Power Plant in Delta, Utah, and at a landfill in Laughlin, Nev. At both locations, the most expensive option would require removing existing landfills and disposing the coal ash elsewhere.

In addition to the one-time costs, annual operating expenses would range from $2.25 million to $110 million.

That could translate to roughly $1.50 to $11.75 more per year for the average DWP customer.

The final cost project would depend on how the EPA classifies the waste — either as a nonhazardous or hazardous material,

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Already, the DWP has committed to eliminating its coal power sources by 2025. Divesting of the Navajo Generating Plant in Page, Ariz., by next year is expected to cost up to $70 million, and converting the Utah plant to natural gas is expected to cost $610 million, according to an agency report.

The early investment in carbon reduction, Pickle said, means DWP’s costs will be spread out over time — an advantage compared to other utilities, which will have to ramp up to meet new carbon emission standards.

The coal ash regulations are separate from new power plant rules the Obama administration proposed on Monday, which triggered industry warnings about higher costs.

The U.S. Chamber of Commerce warned this week that the administration’s proposed rule to reduce carbon emissions at existing power plants could cost the economy $51 billion in economic output and result in 224,000 fewer jobs every year through 2030.

EPA officials and environmentalists have challenged some of the assumptions.

“It’s disingenuous to claim a panoply of rules is going to ruin the utility industry,” said Lisa Evans, senior administrative council for Earthjustice, an organization that sued to hasten the coal ash regulations, “and coal ash, when you compare it with the different power plant rules, falls at the bottom (of the costs).”

In September, Evans said, the Office of Management and Budget will review a final coal ash proposal.

About the Author

Mike Reicher is an investigative reporter for the Los Angeles News Group with a focus on government accountability. Reach the author at mike.reicher@langnews.com
or follow Mike on Twitter: @mreicher.